Sir Paul McCartney's new wife Heather Mills has accepted £50,000 in damages from the Sunday Mirror after the paper falsely alleged that she was being investigated over money raised for charity.

The paper wrongly claimed in May that the charity commission was investigating Ms Mills over money collected in an appeal for the victims of an earthquake in India in 2001.

In a statement from her lawyer Ms Mills said she was "pleased the Sunday Mirror has recognised that the allegations were unfounded and that her reputation has been vindicated".

"She is also pleased that she may now concentrate on the important issue of her charity work instead of wasting an enormous amount of valuable time and energy defending her charity and herself."

Aside from her recent marriage to the former Beatle, Ms Mills is best known for her charity work. She has campaigned on behalf of victims of landmines and those who have lost limbs since losing her own left leg in a motorcycle accident in 1993.

She plans to donate the money to the charity Adopt-A-Minefield.

The Sunday Mirror will also pay Ms Mills' legal costs.

"Our story was based on a statement from the Charity Commission concerning Heather Mills' charitable activities and was published in good faith. We accept that aspects of it were not correct and we are happy that we have now been able to resolve this matter," said a spokesman for Trinity Mirror, the publisher of the Sunday Mirror.

Earlier this year the Sunday Mirror was fined £75,000 and ordered to pay costs of £54,000 for publishing an article that led to the collapse of the Leeds United footballers' assault trial and forced a retrial at the cost of £1.1m.

In 1993 Elton John was awarded £350,000 in libel damages after the Sunday Mirror claimed he had been seen at a party chewing food then spitting it back into his napkin, telling fellow diners it was a good way to lose weight. The sum was later reduced to £75,000 on appeal.

Last year Sir Paul branded the British press "the naughtiest in the world" and accused newspapers of lowering standards.